Category Archives: Subaru Legacy

It’s a well known fact that simply driving a new car away from the dealership is one of the most horrifically expensive things you’ll ever do. ALG measures automotive residual values in the American marketplace – that is, the value of a car when you sell it, three years after purchase.

Depreciation of the value of a car is often the largest part of the cost of ownership, and hence a good performance in ALG’s Annual Residual Value Awards is a strong indication of how much that brand will cost to drive, and for the average man in the street, the current retained-value king is Subaru.

Fuji Heavy Industries Subaru brand has now won the award three years running, with Lexus regaining top spot amongst luxury brands. The report suggests that German and American manufacturers are a long way behind Japanese (11 of the 21 awards) manufacturers in this critical but often overlooked aspect of real car ownership costs.

Indeed, the deeper you look into the latest ALG figures, the more Japanese brands appear to have created an unassailable lead in vehicle ownership costs.

ALG’s Residual Value Awards honor the vehicles in each segment that are predicted to retain the highest percentage of their MSRP after a three‐year period.

In ranking the overall Mainstream Brand Residual Values for 2012 models, Japanese brands account for five of the top six brands and only one German brand (Volkswagen) is above the industry average.

Two Subaru models also won individual segment awards: the Legacy (Midsize Car) and the Outback (Midsize Utility Vehicle).

1 Subaru

2 Honda

3 Hyundai

4 Mazda

5 Toyota

6 Nissan

7 Kia

8 Volkswagen

All other brands were below the industry average.

This year’s awards are based on 2012 model year vehicles, and winners were chosen after assessing historical retained value performance and industry trends. Many factors a car’s ability to retain its value over a three year period, with cars which are often subject to discounting and buying incentives performing poorly, a higher percentage of fleet sales tending to depress used values, and perceived quality being the key factors.

Say moshimoshi to Subaru’s Advanced Tourer Concept, which is getting unveiled at the 2011 Tokyo motor show alongside the long-awaited BRZ coupe.
And, according the chaps in Ōta, the hybrid boxer-engined show car’s giving us a ruddy good insight into the replacement for the hoary but marvellous Legacy. It’s strikingly similar proportions suggest plenty of truth in the claim, too. This is a Very Good Thing.

Just look at it! A GT-R-like rear shrug, a cool wobbly spoiler and gently Art Deco wood banding. But we also discovered that there’s some interesting tech on board, chiefly the downsized boxer engine.

As well as being shackled to a single electric motor, the petrol’s been downsized and now uses direct fuel injection. It’s also got a high-pressure turbocharger, which Subaru reckons will allow the current crop of 2.5 and 2.0-litre engines to shrink to an awfully small 1600cc. No official figures have crept out, but engineers reckon it can be tuned to rub shoulders with the 262bhp 2.5-litre turbo once the boost from its hybrid’s accounted for. Not bad.

The bad bit is that the Advanced Tourer’s blown 1.6 runs through one of those Lineartronic CVT transmissions. On the plus side – and as you’d expect from Subaru – it powers all four wheels.

There is, of course, lots of pie-in-the-sky tech flagellation. The main offender’s a digital monitor built into the steering wheel that display maps, TV and internet services. Which sounds tremendously dangerous. To make up for it, it incorporates Subaru’s new EyeSight crash avoidance system – two cameras mounted above the rear-view mirror monitor traffic conditions and detect pedestrians and cyclists. Safe.

Subaru of Indiana Automotive Inc. in Lafayette will be featured this week on the cable channel SCIENCE. Thursday’s episode of “How Do They Do It” will show viewers how a Subaru is built from beginning to end. Last month, a production crew, sent by Discovery Communications Inc. spent two days shooting video footage at SIA.

Have you ever wondered how a car goes from a coil of steel to a finished vehicle all under one roof? Subaru of Indiana Automotive, Inc. (SIA) will be featured in this week’s episode of “How Do They Do It” which airs Thursday, October 27 at 10:00 PM (EST) on SCIENCE. Viewers will get a glimpse at some of the processes and people that help SIA build approximately 250,000 vehicles every
year.

Last month, a production crew sent by Discovery Communications spent two days shooting video footage of the production process at SIA. The result is a comprehensive look at how a Subaru is built beginning
with coils of steel and ending with a new Legacy, Outback or Tribeca being driven off the line. Viewers will also see some of the rigorous testing procedures that every Subaru undergoes before being sent to
dealerships across the U.S. “How Do They Do It” is a documentary-style program that goes behind the scenes to discover how to do
the things, and make the things that form the modern world. The “How Do They Do It” episode featuring SIA can be viewed this Thursday at 10:00 PM (EST) on SCIENCE.

With six months of sales results in the book, and the effects of a parts shortage in Japan behind them, the second half of 2011 will bring increased production and additional hiring to Subaru of Indiana Automotive Inc. in Lafayette.

“During the first six months of the calendar year we built about 115,000 (Subaru and Toyota) units,” said Tom Easterday, executive vice president at Subaru of Indiana Automotive Inc. in Lafayette. “That’s less than what we originally forecast, because of the parts shortage. We really needed to be running overtime.”

A March 11 earthquake and tsunami in Japan disrupted parts production and exporting from that country. It also impacted sales results for some vehicles, including Subaru models and the Toyota Camry which are built at SIA.

With the parts problem solved, SIA is planning to ramp up production soon by returning to daily and Saturday overtime hours for some associates at the Lafayette plant where the workforce numbers approximately 3,550.

“We’ll have about 150 new people added by mid-July to the end of August,” although a breakdown of additional Subaru and Toyota associates hasn’t been made, Easterday said. “We’ll also have a Subaru line speed increase in the first week of September and a model launch of the 2012 Camry in the first part of September.”

A report released Friday by Subaru of America Inc. shows the company sold 19,794 vehicles last month. That’s 8 percent fewer than were sold June of last year.

“Customer demand hasn’t let up and our dealers did a terrific job selling cars as soon as they arrived at their stores,” said Bill Cyphers, senior vice president for sales at Subaru of America. “We continue to outperform our initial expectations for this period thanks to more production arriving than we first anticipated and better efficiency in getting our cars to dealers and out to customers.”

Among vehicles built at SIA, June results showed:

• Sales of the Legacy increased by 15 percent, to 3,471 units.

• Sales of the Outback rose by 21 percent, to 7,914 units.

• Sales of the Tribeca gained 3 percent, to 180 units.

Among the company’s Japanese-made models, sales of the Forester fell by 28 percent, to 5,466 units; while sales of the Impreza line dropped by 35 percent, to 2,763 units.

Through the first six month of 2011, Subaru sales totaled 132,049 — an increase of 5 percent over the January-June period of last year.

Six-month sales figures for vehicles built at SIA show customer acceptance of the Outback grew by 25 percent, to 51,239 units, while the Legacy posted a 12 percent increase, to 21,284 units; and the Tribeca lost 3 percent, to 1,274.

“We still have record demand for our product in dealerships, however we are still working through a low inventory period after the March earthquake and tsunami in Japan,” said Thomas Doll, executive vice president and chief operating officer at Subaru of America.

“Our dealers managed to be incredibly efficient with the inventory available and the situation is improving all the time. We expect 2011 will still be the second best year ever for Subaru in the U.S.”

Set amid tawny popcorn and soybean fields, weathered barns, and rusty silos, the Subaru of Indiana Automotive plant cuts a swath. A 3.4-million-square-foot monolith abutted by railroad tracks, SIA has a mountain of compost and the occasional coyote skittering through the surrounding 832 acres of woodland. Step inside, though, and you’ll discover why this might be the most exemplary car factory in America.

In its 22-year history—a period that has spanned three recessions, a global financial crisis, massive U.S. auto bankruptcies, and the departure of Isuzu, a founding partner, from the operation—SIA has rolled out more than 3 million vehicles and has never resorted to layoffs. Instead, it’s given workers a wage increase every year of its operation. Staffers also enjoy premium-free health care, abundant overtime ($15,000 each, on average, in 2010), paid volunteer time, financial counseling, and the ability to earn a Purdue University degree on-site—all in a state that has lost 46,000 auto jobs and suffered multiple plant foreclosures in the past decade. And the truly astonishing thing is how it achieved all this: through a relentless focus on eliminating waste. “This is not about recycling, or a nice marketing to-do,” says Dean Schroeder, a management professor at Valparaiso University who has studied the plant. “This is a strict dollars-and-cents, moneymaking-and-savings calculation that also drives better safety and quality.”

Toyota made kaizen—the Japanese principle of constant “change for the better,” with a special focus on efficiency, aka “pushing lean”—famous. SIA, you could say, has instilled green kaizen, or pushing green. Starting in 2002, SIA set a five-year target for becoming the nation’s first zero-landfill car factory. That meant recycling or composting 98 percent of the plant’s waste—with an on-site broker taking bids for paper, plastic, glass, and metals—and incinerating the remaining 2 percent that isn’t recoverable at a nearby waste-to-fuel operation to sell power back to the grid. Within two years, the results spoke for themselves.

“Everyone quickly saw the green dividend of not wasting anything,” says Tom Easterday, the plant’s executive vice-president, passing a stack of yellowed Styrofoam cases that have survived four round trips around the globe. “You reduce packaging, negotiate a better deal from suppliers, and everyone then shares in the savings.”

Today, the plant abounds with boxes and containers scribbled over with marks that show how many times they have traveled from Japan to Indiana and back (and back again). On a tour of the plant, Easterday sped a golf cart past a welder whose metal shavings are swept off the asphalt floors and auctioned into a roaring bull market for copper. Last year, Easterday says, SIA saved approximately $5.3 million by obsessively reducing, recycling, composting, and incinerating; Valparaiso’s Schroeder calculates that Subaru saves multiples of that figure by using zero-landfill discipline to reduce worker injuries and fatigue. He cites the example of SIA’s switch away from taking cars apart to check the quality of welds—a process that wasted metal and risked jackhammer injuries—to ultrasonic technology that did so better, faster, and far cheaper. SIA workers get bonuses (grand prize: a new Subaru Legacy) for pointing out excess packaging and processes that can be cut from the assembly line and then rebated by suppliers. All the savings are effectively plowed back into plant operations—and overtime.

To score a cherished “associate” position at the factory—there’s a 10-1 ratio of applicants to openings—would-be employees are expected to put in long hours learning and practicing SIA’s low-impact manufacturing. That means scrutinizing every byproduct, from welding slag to plastic wrap, for savings. And obsessively slicing seconds off assembly procedures. And a willingness to work whole months of six-day shifts, and likely years on the graveyard shift, while resisting the siren call of unionization. (The United Auto Workers has failed three times to organize the plant’s workers.)

There’s always a catch, and at SIA it’s this: All that ultra-efficiency—when applied to employees—can lead to unforgiving schedules. SIA workers, who start at just over $14 an hour and peak at about $25 an hour, put in 47-hour workweeks that include two Saturdays a month at time and a half—good for $50,000 to $60,000 a year in per-employee salary. (That means roughly 100 employee salaries were protected by the aforementioned $5.3 million zero-landfill rebate.) The upside? When the Japan earthquake interrupted the supply of parts in March, slowing down the plant’s breakneck output, SIA was able to keep paying its workers in full to volunteer in town. The downside: “Everyone’s burned out here,” says Kay Tavana, a 48-year-old who installs airbags and headlights. Not that she isn’t grateful for the work and the SIA perks. Working while on chemotherapy for a blood disease, Tavana avails herself of SIA’s free gym to rev up for her shift from 4:30 p.m. to 3:30 a.m.

The cost savings and social programs at SIA wouldn’t amount to much if Subaru’s cars weren’t in demand. From 2008 to 2010, unit sales jumped 41 percent, while last year the company’s 22 percent rise in vehicle sales was double the broader car market’s increase. “You get worker commitment to productivity by offering job security,” says Kristin Dziczek, who studies labor issues at the Center for Automotive Research in Ann Arbor, Mich. “But the best job security is still a product people will buy.”

With SIA operating at maximum capacity and with an expansion plan under way, Vice-President Easterday says this “experiment” in the middle of Indiana corn country could someday export its American-made Japanese cars to the rest of the world. His SIA case study left Schroeder convinced that “Dumpster diving can be great for business.”

Officials with Subaru of Indiana Automotive Inc. plan to ask city officials for tax breaks on $14 million in new engine-building equipment the company will buy.

The equipment, expected to be installed later this year, will be used to build engines for the company’s 2013 Legacy and Outback vehicles.

Mayor Tony Roswarski spoke in support of the proposed seven-year tax abatement during an informal meeting of the city’s redevelopment commission today.

“Getting the engine here is a very big step for this community, so we’re very, very supportive of this abatement,” Roswarski said.

The project is expected to bring 20 to 40 new jobs to the SIA plant off Indiana 38 in Lafayette. The new engine, described as the company’s third-generation boxer engine, will be built there at the facility’s existing engine plant, Hazaray said.

The average salary for workers who will build the engines will be about $50,000, Hazaray said.

Typically, she said, most of the engines for Subaru vehicles are made in Japan.

“Lafayette has been very supportive of us, so it made sense financially to create this engine here,” she said.

SIA currently employs 2,916 full-time workers and 650 variable workers, commonly referred to as temps, Hazaray said. Employees will be hired to build the new engine in phases.